i'm going to solve the economic crisis

Somebody tell me what's wrong with my reasoning here (besides the fact that it implicitly accepts the premise that the government has got to Do Something):

1) Financial institutions are failing in large part due to mortgage-backed securities, which are hemorrhaging value because (duh) a bunch of people got mortgages they couldn't afford.

2) People being displaced from their homes (setting aside the question of whether they "deserve" to be or not) is a Bad Thing. Moving is a drain on productivity, money spent on moving adds very little to the economy (sorry, U-Haul), and vacant houses cause surrounding property values to slip, i.e., pretty much everybody loses out here.

3) Therefore, isn't the simplest way through this to ensure that a) mortgages get paid, and b) people don't have to move?

So I propose the following:

If a mortgage goes into default, the feds seize the house and begin to pay the mortgage. They offer to rent the house to the previous owners at a rate that defrays as much of the mortgage payment as possible, while remaining affordable to the tenant. There are steep lease terms--maybe 5 years, with a serious penalty for bailing, and maybe the rent is withheld from paychecks like income taxes--but the rent rate is locked in, just like a (sensible) mortgage would be. Maybe after 5 years of good faith rent payments, offer incentives to the banks to renegotiate financing and transfer the mortgages back to the previous homeowners?

This way, mortgages (and therefore their derivatives) retain most of their value, no one has to move, and a good chunk of the cost is borne by overextended borrowers while falling short of punitive.

Surely we could pull this off for less than $700 billion net, right?

Addendum--When you have a good idea, always assume someone else has had it already.